- TRENDLINE THEORY
A trendline is a line drawn over or under pivot highs or lows to represent the current price direction. In any time frame, a trendline provides a visual representation of support and opposition. They show price direction and speed, as well as patterns during moments of price contraction..
The Trendline Trading Strategy is a crypto price action trading strategy that focuses on price bounces off trendline.
When it comes to a trendline, you’ll observe that price does two things on your charts:
It either bounces off of it, indicating that it follows the trendline, or it breaks it. When it breaks, you can trade it using the trendline break forex trading technique.
When prices bounce off the trendline, this approach is used to trade.
To use the trendline trading strategy, you must first understand how to build a legal or suitable trendline.
1.A trendline is a single line or curve that shows the best fit of given data.
2.On a chart, a single trendline can be used to provide a clearer view of the trend.
3.To form a channel, apply a trendline to the highs and lows.
4.From trader to trader, the time period being studied and the exact points used to form a trendline differ.
- SECRET FOR SUCCESSFUL TRADING
- DO’S AND DON’T IN TRADING
DO’S IN TRADING
1.Check the trendline for at least three touches.
2.Count the number of times you touch your fingers in a row.
4.Confirm a setup with other tools.
5.Trendlines function better over longer periods of time.
6.Watch for pullbacks to confirm a trendline break.
DON’TS IN TRADING
1.Don’t trade on a trendline that hasn’t been confirmed.
2.After you’ve entered a trade, don’t alter your trendline.
3.Excessively steep trendline are unsustainable.
- USES OF TRENDLINE IN TRADING
Traders who want to make sure that an asset’s underlying trend is working in their favor frequently employ trendline. Traders can apply trendline to identify probable regions of support and resistance, which can aid in determining if the trend will continue. Any trader who takes the time to learn how to construct a basic trendline and incorporate it into their trading plan will gain this strategic edge.
- HOW TO DRAW YOUR OWN TRENDLINE
Step 1: Find the line that nearly divides your data in half.
Because your trend line approximates your data, you’ll want it to be in the middle of everything. Half of your points should be above your line, while the other half should be below it.
Step 2: Make a line.
After you’ve found the line that passes through the approximate centre of your data, you can draw it.
Your trend line for the graph above will look like this.
You count 5 points above and 6 points below when counting your points. You don’t have to have exactly half above and half below because your trend line is approximate. You’ll be fine as long as it’s around half and half.
- DOES TRENDLINE TRADING WORKS
The psychological process’ strength and direction will alter over time, which is why trend lines will be broken and invalidated more frequently than not. A basic trend line, on the other hand, is a very effective and important instrument for determining the direction and strength of market participants’ emotions.